It looks as if insurance companies are keen to hasten the demise of annuities, a product upon which they are very dependent.  L&G are piloting a scheme which may see people living in poor areas a much better deal on their pension because the have much shorter lives.

Annuities work for two reasons; firstly they provide a guaranteed level of income, there is nothing to worry about; secondly, they pool the lifespan risk.  Those who die early subsidise higher incomes for those with longer longevity.  Insurance companies, desperate for a marketing edge are busily chipping away at the benefits of this pooling.  In my view they may end up by killing the goose that laid the golden egg.

If wealthier pensioners continue to abandon annuities in favour of unsecured income (drawing down on the investments directly), driven there by falling annuity rates, this will only accelerate the process.  Now, it is entirely plausible that the insurers are looking to build a business model focusing on selling annuities to poorer people, but I would be surprised.  It is more likely that this a just an example of their lack of their short termism, something they seem unfailing to display.